Yesterday featured the classic market false break at the ASX 200 pushed tentatively through the bottom of its trading range, only to attract late buying and close narrowly on the right side of support.

Today will see a firmer open as traders respond to bargain hunting in US stocks. Markets have made the judgement that the post missile test reactions of the US; the UN and North Korea do not warrant a move to full ‘risk off” mode in stock markets at this stage.

The key to market mood will be whether today’s rally can move the ASX 200 convincingly past yesterday’ high at 5710. Remaining inside yesterday’s trading range would be an unconvincing performance indicating that markets remain nervous and leaving open the possibility that this is only a “dead cat bounce”

The index will not be helped by a number of stocks including Telstra trading ex-dividend today.  This will strip over 7 points from the theoretical value of the ASX 200 index

Banks are likely to hold the key to the index today.  Potential bargain hunters will need to balance whether general risk off relief will be enough to outweigh concerns over the banks’ regulatory issues.

The state of the housing market remains a key variable for the future of Australian economy and the outlook for the Aussie Dollar. After yesterday’s figures showing a sharp drop in apartment sales, markets will be focussed on the housing  components of today’s construction  and building approvals data.